APHRIA EX­ECS TO STEP DOWN

Founders of pot firm make way for new lead­er­ship

Changes are afoot in the cor­po­rate lead­er­ship of Leam­ing­ton-based cannabis com­pany Aphria Inc. amid tur­moil over the at­tack of a short seller and a wa­ver­ing stock value.

Aphria an­nounced Fri­day that its CEO, Vic Neufeld, and com­pany co-founder, Cole Cac­ciav­il­lani, will both “tran­si­tion out of their ex­ec­u­tive roles in the com­ing months.” Neufeld and Cac­ciav­il­lani will re­main on the com­pany’s board of di­rec­tors, but the com­pany said it will shift to “a glob­ally-minded ex­ec­u­tive lead­er­ship team for the long-term ben­e­fit of the com­pany ’s pa­tients, share­hold­ers, cus­tomers and em­ploy­ees.”

In a news re­lease, Neufeld re­called the roots of the com­pany in a Leam­ing­ton green­house op­er­a­tion where Cac­ciav­il­lani was grow­ing “mil­lions of pot­ted flow­ers” five years ago, when the Cana­dian med­i­cal mar­i­juana mar­ket opened.

“Now, with le­gal­iza­tion and glob­al­iza­tion, in­clud­ing a huge mar­ket op­por­tu­nity with pos­i­tive devel­op­ments in the U.S., Aphria’s next gen­er­a­tion of lead­er­ship may take the reins,” Neufeld said. Neufeld noted that build­ing and lead­ing Aphria has taken a toll on his health, fam­ily and per­sonal pri­or­i­ties. Cac­ciav­il­lani men­tioned that both Neufeld and him­self are in their 60s.

Ac­cord­ing to Neufeld, a suc­ces­sion plan is in place, and he and Cac­ciav­il­lani will step down “at the ap­pro­pri­ate time.”

An ex­act date has not been given for the ap­point­ment of a new CEO. The com­pany’s board has asked Neufeld and Cac­ciav­il­lani to be avail­able as “spe­cial ad­vis­ers” to the chair and pres­i­dent. Neufeld and Aphria did not re­ply to re­quests for fur­ther com­ment on Fri­day.

The an­nounce­ment came with a re­port on the com­pany’s sec­ondquar­ter re­sults. Founded in 2014, Aphria Inc. has risen to be­come one of the high­est-val­ued cannabis com­pa­nies in the world, with a cur­rent mar­ket cap­i­tal­iza­tion of more than US$2 bil­lion. The com­pany’s lead­er­ship was formed when Neufeld, for­mer CEO of vi­ta­min com­pany Jamieson Lab­o­ra­to­ries, joined with Aphria founders Cac­ciav­il­lani and John Cervini.

But af­ter a rocket-like as­cent, Aphria be­came mired in con­tro­versy at the start of De­cem­ber, when a damn­ing re­port by a short seller made the com­pany’s stock plum­met.

Call­ing the com­pany a “black hole,” the short seller, Quin­tes­sen­tial Cap­i­tal, al­leged that Aphria has wasted hun­dreds of mil­lions of dol­lars on worth­less for­eign ac­qui­si­tions as part of a fi­nan­cial shell game. Aphria dis­missed the re­port as “false and defam­a­tory ” and promised a com­pre­hen­sive, line-by-line re­but­tal, which, as of Jan. 11, had still not come.

The com­pany ’s story was fur­ther com­pli­cated in late De­cem­ber with a hos­tile takeover bid by an Ohiobased mar­i­juana com­pany, Green Growth Brands. Con­tro­versy con­tin­ued when it emerged that the sec­ond-largest share­holder of Green Growth Brands — GA Op­por­tu­ni­ties Corp. — is backed by Aphria and ad­vised by Neufeld.

The foren­sic anal­y­sis firm Hin­den­burg Re­search, as part of the short seller at­tack on Aphria, sug­gested that the com­pany is “part of a scheme or­ches­trated by a net­work of in­sid­ers to di­vert funds away from share­hold­ers into their own pock­ets.”

But ear­lier this month, an in­ves­ti­ga­tion by fi­nan­cial news out­let Bloomberg put the short seller’s claims in ques­tion af­ter jour­nal­ists vis­ited Aphria as­sets and prop­er­ties in Ja­maica that Quin­tes­sen­tial Cap­i­tal had sug­gested did not ex­ist.